Can someone please help me with my 401K?

amother

Scarlet

Thu, Jul 20 2017, 1:00 pm

Help!
My new employer offers a 401K plan. I know how important it is but I am totally lost.
What is a normal percent to contribute? Can 5% make a difference?
How on earth do I choose where to invest?
Small Cap? Large Cap? Bonds? Cash/ Stable Value? Target Date?
I don't even know what anything means.
Is it just like roullette where you choose anything and hope for the best because who says you can guarantee returns?
Please help me if you can. I can provide more info if necessary. Thanks ladies!!

Thu, Jul 20 2017, 1:39 pm

Target date probably refers to the year you plan to retire. The fund will be balanced to provide the best mix for each stage of life - but be sure to read the plan description rather than take my word for it.

The company administering the retirement plan may have advisors available to meet with employees.

suzyq

Fri, Jul 21 2017, 12:09 pm

Hi -

This is my field. As someone else commented, if your employer offers a match, make sure to put in at LEAST as much as they are matching to - that is free money and a benefit of your employment. Shoot for putting 10-15% of your salary in if possible - but at least maximize the match offered by your plan.

If you are really not investment savvy, then I suggest you invest your money in the target date fund which best corresponds to the year in which you plan to retire. For example, if you are currently 30 years old and plan to retire around age 65, then your estimated retirement year would be 2052, so you would choose the target date fund that has the year 2050 in it. These target date funds are geared so that as you get closer to your retirement date, they fund itself gets less and less risky so that you will have enough money for retirement.

I do NOT suggest using the managed service option - you will pay extra and we have done studies that prove they get no better returns than not using the managed option, especially considering the additional fees.

Feel free to Private message me with other questions you may have.

amother

Scarlet

Fri, Jul 21 2017, 12:48 pm

Thanks everyone for your responses! I just figured out healthcare so now I'm trying to find more brainspace to figure this one out Smile

About the target funds- or any, really- what if I don't plan on working here till I'm 65? Is it still worth it if I only do it for like 10 years or so? What happens to the money- are the funds still mine if I'm not an employee?

Thanks so much.

suzyq

Fri, Jul 21 2017, 1:40 pm

amother wrote:

Thanks everyone for your responses! I just figured out healthcare so now I'm trying to find more brainspace to figure this one out Smile

For any length of time you plan to work, it's worth it to put money away so it can grow. The money that you put into the plan is ALWAYS 100% yours. Your employer's match is yours, depending on the vesting schedule (the longest time you have to be at your job for it to be 100% yours is 6 years, but most plans don't make you wait that long). Once you leave your job, you can either keep your money in the plan and let it grow, you just can't put any more money in, or you can roll it out into an IRA. Or you can take it as a distribution, but depending on your age, you would possibly have to pay a penalty. But just leaving your employer doesn't make you lose the money.